Research is stacking up demonstrating that when hospitals acquire physician groups or other hospitals, prices for healthcare services go up. This trend reflects the very real macroeconomic impact of competition, or the lack thereof, and directly impacts employers and other healthcare purchasers including consumers. They are the ones seeing prices rise by 20%, 30%, even up to 47% for physician services in markets where a merger or acquisition has occurred.
Given that they purchase healthcare on behalf of many Americans, can employers do anything about the rising costs? What role can the purchasers of healthcare play in shaping the competitive landscape around them?
Though policy makers may need to step in where market forces fail, employers should play a significant role as benefit designs and provider network designs adopted by healthcare purchasers, among other factors, can impact the need for providers to compete.
Consider the rise of accountable care organizations, which hold groups of providers collectively accountable for the quality and cost of care delivered to a patient. In theory, the ACO model should promote competition among providers needing to demonstrate that they can deliver low cost, high quality care to be included in the group.
That said, ACOs have also created a new motivation for provider groups to merge or integrate, as increased care coordination across different types of doctors becomes a skillset with upside potential, daftar poker given that payment arrangements allow them to share in any savings they generate. Some employers are betting that the potential gains in efficiency and quality from ACOs may outweigh the risks associated with consolidation, but the evidence for this to date is weak. If there is sufficient competition among ACOs in a given market, these employers might be more likely to win this bet.
How can employers stimulate competition among providers and control utilization of overpriced health care in tough markets? There are plenty of models that are less murky to consider whose design is structured to stimulate more competition among providers.
Let’s look at some potential strategies:
Tiered or narrow networks: Creating and offering insurance products to employees that provide access to a subset of providers selected for their relative affordability is a potentially powerful way to insert competition among providers and health plans. Adding a quality component to the selection goes even further. Tiered networks offer advantageous cost sharing when employees choose providers in the more affordable tier. Narrow networks often come with even lower premiums and cost sharing as employee choice is more restricted. Providers don’t want to be in lower tiers or out of network and risk losing volume. In the toughest markets, however, dominant providers successfully prohibit these options by threatening health plans to pull out of their networks altogether.